Biggest Winners of 2019

Four of the stocks in the S&P 500 literally doubled in value this year. On the final day of 2019, these have been the best-performing stocks in the S&P for the year:

1. Advanced Micro Devices: up 150 percent
2. Lam Research:  up 120 percent
3. KLA Corp.: up 104 percent
4. Target: up 102 percent
5. Chipotle: up 94 percent
6. Xerox: up 93 percent
7. Qorvo:  up 92 percent
8. Applied Materials Inc.:  up 90 percent
9. Copart:  up 90 percent
10. Leidos Holdings: up 89 percent

Many Unhappy Returns

Do you know what National Returns Day is? It's a fairly new "holiday," taking place each year on January 2. And for the seventh straight year, it's going to be a record setter.

United Parcel Service said last week that it forecasts a record National Returns Day, with 1.9 million returns expected. That will be up 26 percent from last year. Optoro, a returns logistics company, forecasts $100 billion in returns for the holiday shopping season, up $6 billion from 2018.

The reason for the increase of all these returns is the growth of e-commerce activity. And the ease of returning an item is growing in importance as well: The UPS Pulse of the Online Shopper study found that 73 percent of online shoppers base their decision to make another purchase from a retailer on the return experience.

Retirements Changes in a Decade

What has happened to retirement in America over the past decade? To a certain extent, it has become a tale of two very different realities. Remember, in 2010, the economy was just beginning to recover from the worst recession and financial crisis in recent memory, and millions of workers were worried that their retirement plans were ruined.

Now, the landscape is very different. The Employee Benefit Research Institute has developed a model that simulates the percentage of households likely to have adequate resources to meet retirement expenses, and their model shows that the highest-income households have seen their odds of a successful retirement improve sharply during this decade. Middle-income households, meanwhile, have seen some gains, but still have only 50-50 odds of success. But sadly, the lowest-income households have seen their retirement prospects diminish sharply — among these boomers approaching retirement, their odds of success have fallen during the decade from 26 percent to 11 percent.

Just 52 percent of American households owned retirement accounts in 2016, according to Federal Reserve data, not much changed from 2010, when that figure stood at 50 percent. But among households that had workplace retirement plans, the gains have been substantial. According to Vanguard, average account balances jumped 22 percent from 2006 to 2018.

Worst Stocks of the Decade

It’s always a little unfair to list the worst stocks over any long period of time, since the absolute worst ones will have gone out of business long before the time frame ends. Nevertheless, here are the worst-performing S&P 500 stocks from the decade of the teens, counting only those that are still around to tell the tale:

Schlumberger: Down  46 percent
Occidental Petroleum: Down 51 percent
Perrigo: Down 58 percent
Kraft Heinz: Down 58 percent
Under Armour: Down 60 percent
CenturyLink: Down 61 percent
Mosaic: Down 69 percent
Devon Energy: Down 71 percent
Freeport-McMoRan: Down 73 percent
Apache: Down 82 percent

Thoughts for Christmas Day

Christmas is a season for kindling the fire for hospitality in the hall, the genial flame of charity in the heart. ~ Washington Irving

The thing about Christmas is that it almost doesn't matter what mood you're in or what kind of a year you've had - it's a fresh start. ~ Kelly Clarkson

Before we took down the tree each year, Dad would always say a prayer that we would be together the next Christmas. I cling to that prayer, which serves as a reminder that it's important to be grateful in the present for the people you love because, well, you never know. ~ Catherine Hicks

Looking Ahead to 2020

It has been a notably strong year for U.S. equity markets, with the S&P 500 boasting a gain of 28.5 percent, while the Dow Jones Industrial Average is up 22 percent in 2019. The Nasdaq exceeds them both, with a gain of 34.5 percent.

That performance has some wondering if we’re due for a bounceback, if this powerful ascent will translate into a down market in 2020. However, if statistics over the past 70 years hold true, next year is likely to produce healthy, if not stellar, gains.

The S&P 500 tends to ring up an average annual gain of 11.2 percent when it finishes the preceding year with an advance of at least 20 percent, and gains 83 percent of the time, according to Dow Jones Market Data figures going back to 1950. The Dow tends to climb 75 percent of the time, with an average return of about 8.9 percent in the following year, when it finishes the previous year with a return of at least 20 percent.  And the Nasdaq returns 14.2 percent on average, rising about 78 percent of the time, when it has registered a return of at least 30 percent in the prior year.

Biggest Winners of the 2010s

We're approaching not just the end of the year but the end of the decade. According to Bespoke Investments, these are the ten stocks that have been listed in the S&P 1500 for the entire decade that have returned the most (through December 17):

1. Patrick Industries, up 4,622 percent
2. Netflix, up 3,909 percent
3. Domino's Pizza, up 3,382 percent
4. LendingTree, up 3,017 percent
5. MarketAxess, up 2,587 percent
6. Repligen, up 2,099 percent
7. ABIOMED, up 1,950 percent
8. Lithia Motors, up 1,792 percent
9. Trex, up 1,698 percent
10. Heska, up 1,683 percent

The State of the Raise

Did you get a raise in 2019? An estimated half of U.S. workers say they didn’t get a raise in the past year, a new Bankrate survey shows. But even that's an improvement over the previous year’s figure of 62 percent.

Some 49 percent of workers reported having received a pay increase in some form, including 28 percent who got a pay bump, 12 percent who got a higher-paying job and 10 percent who got both.  That figure was an 11-percentage point increase over last year, and the highest since 2016.

The results also showed an uptick from last year in pay increases that were based on performance (38 percent this year vs. 37 percent last year) or as part of a promotion or new job responsibilities (31 percent this year vs. 29 percent last year). But there continues to be a decline in raises given as cost-of-living increases (26 percent this year vs. 27 percent last year).

What the SECURE Act Could Mean to You

Earlier this week, the House passed a $1.4 trillion spending bill that includes the bipartisan SECURE Act, which aims to increase the ranks of retirement savers and the amount they put away. The measure now will head to the Senate, where approval is expected this week before lawmakers head home for the holiday recess.

If the legislation passes, here are some of the things that might affect you:

• The maximum age for making contributions to traditional IRAs, which is now 70½, would be repealed
• The age when required minimum distributions from certain retirement accounts must start would rise to 72, up from 70½
• It would become easier for small businesses to band together to offer 401(k) plans to their employees

The Declining Car Loan

What's happening to car loans in America? A Federal Reserve Bank of New York survey of consumer credit out this week showed a spike in the rate of auto-loan rejections, to 8.1 percent in October from 4.5 percent last October. For the full year, the average rate of car-loan rejections was 7.1 percent, up from 6.1 percent for 2018.

But at the same time, applicants reported fewer denials in other parts of the $14 trillion consumer debt market for the same period. Rejection rates for credit cards, mortgages, and mortgage refinance applications all declined compared to 2018.

Indeed, for the most part, the availability of credit has been increasing. The percentage who applied and were granted credit over the last 12 months increased 1.2 percentage points to 37.7 percent in 2019. The proportion who were rejected declined from 9.1 percent in 2018 to 8.0 percent in 2019.

What Does 2019 Mean for 2020?

While 2019 isn't quite over yet, is it possible the first 11 months of this year bode well for next year? The markets soared heading into the final month of the year, with the S&P 500 gaining over 25 percent through the end of November.

History shows that as a promising sign for next year. Since 1990, the S&P 500 has gained at least 20 percent from January through November on six other occasions. The S&P 500, Dow and Nasdaq have turned in big years — measured from December to December — 100 percent of the time after similar S&P 500 gains through November.

How big? The S&P and Nasdaq gains have averaged above 18 percent in the years following those strong January-through-November periods. The Dow has posted an average gain of 15 percent.

Health Worries for Rich and Poor

It will come as no surprise that health concerns weigh on Americans across the wealth spectrum, millionaires included. Fidelity Investments’ most recent Millionaire Outlook Study, which analyzed the investing attitudes and behaviors of some 2,000 households, found that concerns about health were the main source of stress for both millionaires and their less-wealthy counterparts.

More than one-third of both non-millionaire and millionaire investors had health-related concerns, which accounted for the largest proportion of their overall stress. In terms of health, millionaires worried, first, about their weight, then their own health and then their family’s health. For non-millionaires, weight was also first, but it was followed by their family’s health and their own health.

Of the millionaires who reported higher levels of stress, fewer than half said they felt confident about their health. On the other hand, 86 percent of those who reported lower stress levels felt confident about their health.

Waiting to Take Your Retirement Money

Here’s an odd retirement trend: Millions of workers who contribute to a 401(k) plan do so in order to have money when they retire. But when they do retire, in increasing numbers, they are’t touching those accounts - at least not right away.

More than half of workers — 55 percent — are choosing to leave their assets in their former employer’s 401(k) plan a year into retirement, according to Fidelity data on its workplace retirement accounts. Four years ago, that figure was just 45 percent.

Why does this happen? Some retirees may not touch their 401(k) plans because they don’t need the money yet. Wealthier clients avoid withdrawing from 401(k) plans until they’re 70½ years old, which is around the time they must withdraw required minimum distributions. Given that many recent retirees have done very well in the markets, Fidelity speculates that some retirees may not be sure what to do with that money, such as rolling it over into another account or consolidating all of their 401(k) plans.

November's Jobs Report

Some strong news for the economy out today: The government reported this morning that the economy added 266,000 jobs in November. The unemployment rate ticked back down to 3.5 percent, matching a low from earlier this year that at the time was the lowest since 1969.

The U.S. economy has now added an average of 180,000 jobs each month this year, compared with an average monthly gain of 223,000 in 2018. November marked the 110th consecutive month of job gains.

The strongest industry in November was the health care and social assistance subsector (including child daycare and family services) saw a net gain of 60,200 jobs. Manufacturing technically had its best month for hiring since August 1998, although that was almost entirely thanks to General Motors workers returning from their strike.

Waiting for the Earnings Rebound

Two months into the fourth quarter, analysts have shaved 4 percent off their earnings estimates to $41.12 a share. That's a drop of almost 1 percent compared with a year ago, following a 1.3 percent decline last quarter.

It's common for earnings expectations to drop as a period progresses, but the current pace has been exceeded only twice since 2015. Analysts now expect earnings to rebound sometime next year, although it might be well into 2020 before profits rise meaningfully. The consensus forecast is for a 9.2 percent gain for next year.

Eight months ago, analysts projected fourth-quarter profits would jump more than 9 percent after falling in the first few months of the year. They now see contraction for this quarter and don’t expect a return to 10 percent growth until the second half of 2020.

Manufacturing Slump Continues

Tough news for the economy: Manufacturing activity continued to lag in November with a decline in inventories and new orders, according to the latest ISM Manufacturing reading. The November reading came in at 48.1, down slightly from the previous month’s reading of 48.3.

The number denotes the percentage of manufacturers planning to expand operations. A reading below 50 represents contraction; November was the fourth straight month below the expansion level.

Manufacturing is considered a reliable bellwether for how the rest of the economy is doing, though it accounts for only about one-fifth of GDP. Inside the ISM report, new orders slumped to 47.2, down 1.9 percentage points from October’s 49.1. Inventories, a key input for GDP, came in at 45.5, down 3.4 points from the previous month.

Good News From Black Friday

Americans spent more money Black Friday shopping in 2019 than ever before. Brick and mortar sales were up 4.2 percent over last year, according to an annual holiday spending report from Fiserv, Inc.

Electronics and appliances accounted for $214 per transaction on average, while shoppers spent $101 on sporting goods and $81 on shoes and clothing. Shoppers were willing to travel for a discount: A quarter of consumers traveled more than 25 miles to visit a physical store.

Online shopping also pulled in a record $7.2 billion on Friday, according to Salesforce. That's a 14 percent increase over last year. Even on Thanksgiving itself, digital sales in the U.S. rose 17 percent to $4.1 billion.